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Income development
Transition to the adjusted statement of income
- Special issues are eliminated in the adjusted statement of income. The transition to the adjusted statement is a two-step process: firstly, standard reclassifications are carried out, then the figures are adjusted for individual special items.
- The reclassifications essentially relate to two issues:
- The first issue is the reclassification of net interest income components not related to net financial debt and pension provisions: predominantly the compounding and discounting effects of non-current provisions (excluding pension obligations) and non-current liabilities (excluding financial debt). The non-operational character of these components can also be seen in the fact that their influence on net interest income very much depends on the interest rates as of the balance sheet date.
- The second significant reclassification relates to the amortization of intangible assets capitalized in the course of purchase price allocation (PPA) of acquisitions conducted during the assessment of long-term customer contracts. Existing transport contracts are an essential component of the purchase price valu-ation, in passenger transport in particular. In order to safeguard the operating assessment and to prevent these contracts from being treated differently to other contracts, these amortization components are eliminated from the operating profit. The amount reclassified resulted almost entirely from acquisitions in the DB Arriva business unit.
- Adjustments for special items involve issues which are extraordinary based on the reasons for them and/or the amounts involved, and which would have a significant negative effect on operating development over time. Book profits and losses from transactions with subsidiaries/financial assets are adjusted regardless of their amounts. Individual items are adjusted if they are extraordinary in character, can be accounted for and assessed precisely, and are significant in volume.
Transition to the adjusted statement of income (€ million) | 2020 | Reclassifications | Adjustment of special items | 2020 | |||||||
IFRS com- | Net | PPA | Impair- ment good-will | Re- | Provision for dismantling obliga- tions | Addi- expenses | Other | ||||
Revenues | 39,901 | – | – | – | – | – | – | – | 1 | 39,902 | |
Inventory changes and other internally produced | 3,564 | – | – | – | – | – | – | – | – | 3,564 | |
Other operating income | 3,439 | – | – | – | – | –23 | – | – | –25 | 3,391 | |
Cost of materials | –22,757 | – | – | – | – | 2 | – | 72 | 0 | –22,683 | |
Personnel expenses | –18,297 | – | – | – | – | 134 | – | – | –4 | –18,167 | |
Other operating expenses | –5,235 | – | – | – | – | 0 | 79 | – | 151 | –5,005 | |
EBITDA | 615 | – | – | – | – | 113 | 79 | 72 | 123 | 1,002 | |
Depreciation | –5,372 | – | – | 55 | 1,411 | 1 | – | – | 0 | –3,905 | |
Operating profit/loss (EBIT) | EBIT adjusted | –4,757 | – | – | 55 | 1,411 | 114 | 79 | 72 | 123 | –2,903 | |
Net interest income | Operating interest balance | –615 | 73 | – | – | – | 0 | – | – | 1 | –541 | |
Operating profit after interest | –5,372 | 73 | – | 55 | 1,411 | 114 | 79 | 72 | 124 | –3,444 | |
Result from investments accounted for using | –21 | – | 1 | – | – | – | – | – | – | –20 | |
Other financial result | –91 | –73 | –1 | – | – | – | – | – | – | –165 | |
PPA amortization customer contracts | – | – | – | –55 | – | – | – | – | – | –55 | |
Extraordinary result | – | – | – | – | –1,411 | –114 | –79 | –72 | –124 | –1,800 | |
Profit/loss before taxes on income | –5,484 | – | – | – | – | – | – | – | – | –5,484 | |
Excerpt from the adjusted statement of income (€ million) | 2020 adjusted | 2019 | Change | ||||
absolute | thereof due | thereof due to exchange | % | ||||
Revenues | 39,902 | 44,431 | –4,529 | –57 | –339 | –10.2 | |
Inventory changes and other internally produced and capitalized assets | 3,564 | 3,166 | +398 | –1 | –1 | +12.6 | |
Other operating income | 3,391 | 3,008 | +383 | –2 | –8 | +12.7 | |
Cost of materials | –22,683 | –22,259 | –424 | +42 | +233 | +1.9 | |
Personnel expenses | –18,167 | –18,011 | –156 | +3 | +66 | +0.9 | |
Other operating expenses | –5,005 | –4,899 | –106 | +7 | +22 | +2.2 | |
EBITDA adjusted | 1,002 | 5,436 | –4,434 | –8 | –27 | –81.6 | |
Depreciation | –3,905 | –3,599 | –306 | –3 | +8 | +8.5 | |
EBIT adjusted | –2,903 | 1,837 | –4,740 | –11 | –19 | – | |
Net operating interest | –541 | –620 | +79 | – | –2 | –12.7 | |
Operating profit/loss after interest | –3,444 | 1,217 | –4,661 | –11 | –21 | – | |
Result from investments accounted for using the equity method | Net investment income | –20 | –9 | –11 | – | –0 | +122 | |
Other financial result | –165 | –72 | –93 | +24 | +18 | +129 | |
PPA amortization customer contracts | –55 | –62 | +7 | – | +2 | –11.3 | |
Extraordinary result | –1,800 | –393 | –1,407 | – | +14 | – | |
Profit/loss before taxes on income | –5,484 | 681 | –6,165 | +13 | +13 | – | |
Operating profit figures
The presentation of income development describes the changes in the key items on the statement of income, adjusted for special items.
In the year under review, exchange rate effects caused an overall immaterial decrease in income and expenses. Effects resulting from changes in the scope of consolidation were also not significant. The effects are presented in the above table and are not discussed any further below.
The Covid-19 pandemic adversely affected the economic development of DB Group in 2020 to a significant extent. As a result, the operating profit figures showed a significant decline, primarily driven by the integrated rail system. In the integrated rail system countermeasures could only compensate for a smaller part of the effects caused by performance-related declines in revenues, additional personnel expenses (capacity expansion and wage increases), as well as improvements in quality and digitalization. The development of DB Arriva was also significantly weaker, primarily due to Covid-19. The increase in the operating profit at DB Schenker had a positive impact, mainly driven by the development in air freight.
- Revenue development declined mainly as a result of Covid-19 and the cessation of the ARN franchise.
- Other operating income increased significantly, driven by DB Regional. Covid-19 support received from the industry solution for regional transport was a significant factor here. Covid-19 support services received at DB Arriva also had an impact, among others at UK Bus.
Overall, operating expenses increased only marginally, mitigated by the decline in performance:
- Cost of materials increased slightly. In the integrated rail system, higher maintenance expenses at DB Netze Track and DB Netze Stations had a particular impact, as did an increase in energy expenses that primarily resulted from price-related factors. At DB Schenker, lower purchased transport services due to declining volumes were more than offset by higher freight rates. This was counteracted by declines in performance at DB Regional. The cessation of the ARN franchise also had an expense-reducing effect at DB Arriva.
- Personnel expenses also increased slightly. In addition to wage effects, the higher number of employees also impacted the integrated rail system. Mainly the cessation of the ARN franchise at DB Arriva and countermeasures at DB Schenker have had a mitigating effect.
- Other operating expenses in the integrated rail system increased significantly, mainly as a result of the Covid-19-related addition to the provisions for impending losses at DB Regional. At DB Arriva, the Covid-19-related creation of provisions for impending losses was partially offset by effects from the cessation of the ARN franchise. The decline in leasing and travel expenses at DB Schenker, among other things, also had an expense-reducing effect.
- Depreciation increased significantly, primarily in the integrated rail system due to capital expenditures and unscheduled depreciation on software.
Net operating interest improved, mainly due to a fundamentally lower interest rate level. However, this had no significant mitigating effect on the significant drop in operating profit after interest.
The significant decline in net investment income was mainly driven by the companies GHT Mobility GmbH, Intercambiador de Transportes Principe PIO S.A. and Trieste Transporti S.P.A., all valued using the equity method.
The significant deterioration in other financial result was mainly due to the impairments on certain book values, including those of the company Barraqueiro, which is valued using the equity method, at DB Arriva and overall higher expenses from the compounding or discounting of provisions.
Extraordinary charges increased considerably, mainly as a result of impairments at DB Arriva:
Extraordinary result (€ million) | 2020 | thereof | 2019 | thereof | |
DB Long-Distance | 1 | 1 | – | – | |
DB Regional | –4 | –4 | 0 | 0 | |
DB Cargo | –13 | –13 | –12 | –12 | |
DB Netze Track | –142 | –141 | –77 | –75 | |
DB Netze Stations | 3 | 3 | 3 | 3 | |
DB Netze Energy | –72 | –72 | – | – | |
Other/consolidation integrated rail system | –193 | –193 | –109 | –109 | |
Integrated rail system | –420 | –419 | –195 | –193 | |
DB Arriva | –1,380 | –1,380 | –182 | –182 | |
DB Schenker | 0 | 0 | –2 | –2 | |
Consolidation other | 0 | 0 | –14 | –14 | |
DB Group | –1,800 | –1,799 | –393 | –391 | |
In the year under review, the extraordinary result consisted of the following special items, among other things:
- impairment of goodwill, mainly as a result of Covid-19-related weaker profit and cash flow expectations (DB Arriva), and
- restructuring measures (mainly in the Other area).
The composition of the extraordinary result in the previous year is presented in the 2019 Integrated Report.
Net profit/Loss for the year
Excerpt from statement of income (€ million) | 2020 | 2019 | Change | ||
absolute | % | ||||
Profit/loss before taxes on income | –5,484 | 681 | –6,165 | – | |
Taxes on income | –223 | –1 | –222 | – | |
Actual taxes on income | –180 | –137 | –43 | +31.4 | |
Deferred tax expense (–)/income (+) | –43 | 136 | –179 | – | |
Net profit/loss for the year | –5,707 | 680 | –6,387 | – | |
DB AG shareholders | –5,710 | 662 | –6,372 | – | |
Hybrid capital investors | 26 | 5 | +21 | – | |
Other shareholders | –23 | 13 | –36 | – | |
Earnings per share (€ per share) | |||||
Undiluted | –13.28 | 1.54 | –14.82 | – | |
Diluted | –13.28 | 1.54 | –14.82 | – | |
The significant decline in profit before taxes on income was reinforced by the development of the income tax position. Actual income taxes rose due to better results for some foreign Group companies. In addition, due to changes in estimates of the future usage of loss carry-forwards, there were deferred tax expenses (previous year: deferred tax revenue). The net profit for the year (profit after taxes on income) thus decreased somewhat more significantly.
Earnings per share developed accordingly.
Operating profit development of the business units
EBIT adjusted by business units (€ million) | 2020 | 2019 | Change | ||
absolute | % | ||||
DB Long-Distance | –1,681 | 485 | –2,166 | – | |
DB Regional | –451 | 408 | –859 | – | |
DB Cargo | –728 | –308 | –420 | +136 | |
DB Netze Track | 409 | 807 | –398 | –49.3 | |
DB Netze Stations | 24 | 210 | –186 | –88.6 | |
DB Netze Energy | 5 | 43 | –38 | –88.4 | |
Other/consolidation integrated rail system | –753 | –622 | –131 | +21.1 | |
Integrated rail system | –3,175 | 1,023 | –4,198 | – | |
DB Arriva | –431 | 289 | –720 | – | |
DB Schenker | 711 | 538 | +173 | +32.2 | |
Consolidation other | –8 | –13 | +5 | –38.5 | |
DB Group | –2,903 | 1,837 | –4,740 | – | |
The development of the adjusted profit/loss figures for the business units was mainly weaker, with the exception of DB Schenker:
- The business units of the integrated rail system saw a huge decline due to the collapse in demand caused by Covid-19. In addition, additional expenses for employees, capacity and quality measures had a negative impact.
- The performance of DB Arriva was also significantly below the previous year, driven mainly by the negative effects of Covid-19.
- DB Schenker saw a positive development, driven partly by the development in air freight. Covid-19-related declines in performance in particular were more than compensated by price effects on the sales side.